Note 21. Commitments and Contingencies

Legal Proceedings We are involved in various legal proceedings in the ordinary course of business. These proceedings are subject to the uncertainties inherent in any litigation. We are defending ourselves vigorously in all such matters and we believe that the ultimate disposition of such proceedings will not have a material adverse effect on our financial position, results of operations or cash flows.

During 2011, we received two Notices of Alleged Violation (NOAV) from the COGCC regarding the reporting of the presence of hydrogen sulfide to the COGCC and local government designee within certain areas of our Piceance Basin and Grover field operations. At this time, the COGCC has not established a proposed penalty for either NOAV. Given the inherent uncertainty in administrative actions of this nature, we are unable to predict the ultimate outcome of this action at this time. However, we believe that the resolution of these proceedings through settlement or adverse judgment will not have a material adverse effect on our financial position, results of operations or cash flows.

CONSOL Carried Cost Obligation Based on the December 31, 2011 Henry Hub natural gas price strip, we forecast our CONSOL Carried Cost Obligation will be suspended throughout the 2012 fiscal year and resume during first quarter of 2013. Therefore, specific payment dates for funding cannot be determined at this time and are excluded from the minimum commitments table below. See Note 3. Acquisitions and Divestitures.

CONE MARC The CONE MARC, which we expect to total approximately $23 million in 2012, is included in transportation and gathering below. Amounts to be paid in years beyond 2012 have not yet been determined by the partners.

Non-Cancelable Leases and Other Commitments We hold leases and other commitments for drilling rigs, buildings, equipment and other property. Rental expense for office buildings and oil and gas operations equipment was $31 million in 2011, $27 million in 2010, and $22 million in 2009.

Minimum commitments as of December 31, 2011 consist of the following:

	Drilling, Equipment, and Purchase Obligations		Transportation and Gathering		Operating Lease Obligations		FPSO Lease Payments(1)		Total
(millions)
2012	$	980	$	55	$	45	$	72	$	1,152
2013		93		49		27		72		241
2014		21		37		28		72		158
2015		13		29		27		70		139
2016		-		29		26		45		100
2017 and Thereafter		-		267		32		155		454
Total	$	1,107	$	466	$	185	$	486	$	2,244

(1)	Annual lease payments, net to our interest, exclude regular maintenance and operational costs, and began during fourth quarter of 2011 once the Aseng FPSO initiated producing operations. See Note 12. Long-Term Debt.